The Chrysler Group plans to spend $300 million to build a new eight-speed automatic transmission licensed from ZF Group, a transmission maker headquartered in Friedrichshafen, Germany.

The investment will pay for installation of special tooling and equipment at Chrysler's Transmission Plant 1 and Kokomo Casting Plant in Indiana and help retain 1,200 jobs there, Chrysler said Wednesday. Production will start in 2013.

Meanwhile, Chrysler said it plans to import the transmissions from Germany before production ramps up in Kokomo. Spokesman Nick Cappa said he could not say when the imports would begin.

Paolo Ferrero, Chrysler senior vice president of powertrain, said in a statement that the transmission would contribute to a 25 percent increase in fuel economy by 2014.

The company did not say which vehicles the transmission would be used in, but it is already being used in rear-drive vehicles made by BMW. Chrysler could use it in the Chrysler 300, Dodge Charger and Jeep Grand Cherokee along with Ram pickups.

The ZF eight-speed transmission made its debut on the BMW 5-series Gran Turismo and 760Li. The transmission achieves a 6 percent improvement in fuel economy over ZF's current six-speed automatic. It is the same size and lower weight than the six-speed.

The transmission has a modular design that can be adapted to hybrid and all-wheel-drive variants.

“The new eight-speed transmission that we'll be producing in Kokomo will transform our future product line,” Scott Garberding, senior vice president and head of manufacturing for Chrysler, said in the company statement.

I notice this thread was started few years ago so I decide to post an update regarding Chrysler plans. The Chrysler Group has put Tipton County, Ind., back on the jobs menu, according to Automotive News. A transmission facility that was made but never used will supposedly be put into use, as Chrysler has asked for tax rewards from Indiana state and local authorities, notes the Kokomo Tribune. Further specifics of Chrysler's request have not been released to the media at this time.